BILL NUMBER: SB 187	CHAPTERED  09/27/99

	CHAPTER   512
	FILED WITH SECRETARY OF STATE   SEPTEMBER 27, 1999
	APPROVED BY GOVERNOR   SEPTEMBER 27, 1999
	PASSED THE ASSEMBLY   SEPTEMBER 3, 1999
	PASSED THE SENATE   APRIL 19, 1999
	AMENDED IN SENATE   MARCH 18, 1999

INTRODUCED BY   Senator Hughes

                        JANUARY 14, 1999

   An act to amend Section 7159.2 of the Business and Professions
Code, and to amend Section 1804.1 of the Civil Code, relating to home
improvement contracts.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 187, Hughes.  Home improvement contracts.
   Existing provisions of the Unruh Act prohibit a retail installment
contract from containing specified provisions.
   This bill would prohibit a provision in a retail installment
contract for a home improvement, as defined, under which the seller
takes a security interest, other than a mechanics' lien, in the buyer'
s principal residence where the buyer is 65 years of age or older.  A
violation of the prohibition would be a misdemeanor, thereby
imposing a state-mandated local program.
   Existing law prohibits a home improvement goods or services
contract of $5,000 or less from providing for a security interest in
real property, except for a mechanic's lien or other interest that
arises by operation of law, and provides that any lien in violation
of that prohibition is void and unenforceable.  Existing law also
prohibits a person or entity making a loan secured by a mortgage on
real property from paying a contractor the proceeds of a loan that
provides funding for goods or services pursuant to a home improvement
goods or services contract of more than $5,000, except by specified
methods.
   This bill would provide that a violation of these provisions would
make the person or entity liable for actual damages, that an
intentional violation would make the person or entity liable for 3
times the contract price for the home improvement, and that the
person or entity would be liable to a senior citizen or disabled
person, as defined, for an additional award up to $5,000.
  The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state.  Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 7159.2 of the Business and Professions Code is
amended to read:
   7159.2.  (a) No home improvement goods or services contract of a
value of five thousand dollars ($5,000) or less shall provide for a
security interest in real property, except for a mechanic's lien or
other interest in property that arises by operation of law.  Any lien
in violation of this subdivision is void and unenforceable.
   (b) When the proceeds of a loan secured by a mortgage on real
property are used to fund goods or services pursuant to a home
improvement goods or services contract of more than five thousand
dollars ($5,000), the person or entity making the loan shall only pay
a contractor under the home improvement goods or services contract
from the proceeds of the loan by either of the following methods:
   (1) By an instrument payable to the borrower or jointly to the
borrower and the contractor.
   (2) At the election of the borrower, through a third-party escrow
agent pursuant to the terms of a written agreement signed by the
borrower, the person or entity making the loan, and the contractor
prior to the disbursement.
   (c) Any person or entity who violates any provision of this
section shall be liable for actual damages suffered by the borrower
for damages that proximately result from the violation.
   (d) Any person or entity who intentionally or as a pattern or
practice violates any provision of this section shall be additionally
liable for three times the contract price for the home improvement.

   (e) Any person who is a senior citizen or disabled person, as
defined in subdivisions (f) and (g) of Section 1761 of the Civil
Code, as part of any action for a violation of this section, may seek
and be awarded, in addition to the remedies provided in this
section, up to five thousand dollars ($5,000) as provided in
subdivision (b) of Section 1780 of the Civil Code.
   (f) The court shall award court costs and attorney's fees to a
prevailing plaintiff in an action brought pursuant to this section.
Reasonable attorney's fees may be awarded to a prevailing defendant
upon a finding by the court that the plaintiff's prosecution of the
action was not in good faith.
  SEC. 2.  Section 1804.1 of the Civil Code is amended to read:
   1804.1.  No contract or obligation shall contain any provision by
which:
   (a) The buyer agrees not to assert against a seller a claim or
defense arising out of the sale or agrees not to assert against an
assignee such a claim or defense other than as provided in Section
1804.2.
   (b) In the absence of the buyer's default in the performance of
any of his or her obligations, the holder may accelerate the maturity
of any part or all of the amount owing thereunder.
   (c) A power of attorney is given to confess judgment in this
state, or an assignment of wages is given; provided, that nothing
herein contained shall prohibit the giving of an assignment of wages
contained in a separate instrument, executed pursuant to Section 300
of the Labor Code.
   (d) The seller or holder of the contract or other person acting on
his or her behalf is given authority to enter upon the buyer's
premises unlawfully or to commit any breach of the peace in the
repossession of goods.
   (e) The buyer waives any right of action against the seller or
holder of the contract or other person acting on his or her behalf,
for any illegal act committed in the collection of payments under the
contract or in the repossession of goods.
   (f) The buyer executes a power of attorney appointing the seller
or holder of the contract, or other person acting on his or her
behalf, as the buyer's agent in collection of payments under the
contract or in the repossession of goods.
   (g) The buyer relieves the seller from liability for any legal
remedies which the buyer may have against the seller under the
contract or any separate instrument executed in connection therewith.

   (h) The buyer agrees to the payment of any charge by reason of the
exercise of his or her right to rescind or void the contract.
   (i) The seller or holder of the contract is given the right to
commence an action on a contract under the provisions of this chapter
in a county other than the county in which the contract was in fact
signed by the buyer, the county in which the buyer resides at the
commencement of the action, the county in which the buyer resided at
the time that the contract was entered into, or in the county in
which the goods purchased pursuant to the contract have been so
affixed to real property as to become a part of such real property.
   (j) The seller takes a security interest, other than a mechanics'
lien, in the buyer's real property which is the buyer's primary
residence where the buyer is a person who is 65 years of age or older
and the contract is for a home improvement, as defined in Section
7151.2 of the Business and Professions Code.
  SEC. 3.  No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.
